Consolidated Water Profit Drops 22% as Manufacturing Revenue Halves

The Tip Desk · August 11, 2026 · 3 min read

The desalination company posted $32.9 million in second-quarter revenue, down 2%, as a sharp manufacturing decline and expired contracts weighed on results.

Consolidated Water (CWCO), a desalination and water-treatment operator, reported that second-quarter 2026 net income from continuing operations fell 22% to $4.0 million, or $0.25 a share, from $5.2 million, or $0.32 a share, a year earlier. Total revenue slipped 2% to $32.9 million, reversing a 3% gain in the same period of 2025.

The quarter's defining pressure came from the company's manufacturing segment, where revenue plunged 49% to $2.7 million from $5.2 million a year ago. The decline accelerated in the first quarter of 2026, when manufacturing revenue fell 76% to $1.4 million, driven by lower purchase-order dollar amounts. Segment operating income dropped 68% to $478,497. The manufacturing drag pushed consolidated gross margin down to 33% from 38% in the year-ago quarter.

Services revenue grew just 1% to $11.6 million, a sharp deceleration from the 12% increase recorded in the first quarter. Operations-and-maintenance revenue within the segment fell 27% to $6.0 million after two PERC contracts expired, wiping out $2.2 million in revenue. Construction revenue surged 89% to $5.3 million on work for Colorado and California water-treatment plants, but the higher-margin O&M decline left segment operating income at $424,436, down from $1.43 million a year earlier.

Bulk revenue provided the quarter's bright spot, rising 20% to $9.9 million on higher energy pass-through charges in the Bahamas and new revenue from the Cat Island desalination plant. Bulk operating income climbed 34% to $2.87 million, aided by lower insurance expense. Retail revenue was essentially flat at $8.7 million, as a 2% volume decline from wetter weather offset a rate increase for a major non-potable customer.

For the first half of 2026, revenue decreased 7% to $62.8 million and net income from continuing operations fell 22% to $7.9 million, or $0.49 a share. Retail water volumes sold declined 6.3% in the half, reversing 8.3% growth for full-year 2025 when dry conditions prevailed.

The company's balance sheet strengthened despite the earnings pressure. Cash and equivalents grew to $132.6 million at June 30, up from $123.8 million at year-end 2025 and $112.2 million a year earlier. General and administrative expenses edged lower to $7.24 million from $7.58 million, with cost reductions across the retail, bulk, and services segments.

Looking ahead, a $204 million desalination project in Kalaeloa, Hawaii, received a limited notice to proceed in July, authorizing roughly $6 million for long-lead equipment procurement, with full construction expected to begin later in 2026. Subsequent to the quarter, the company received approximately $10.1 million in municipal water-treatment equipment purchase orders in Florida — its largest municipal membrane equipment order and largest horizontal cartridge filter order to date. The company also secured a 25-year exclusive water production and supply concession for Seven Mile Beach and West Bay in Grand Cayman, two of the island's three most populated areas.